Payday loan interest rates, fees and APR
Payday lenders charge a flat fee instead of an interest rate. Converting that fee into an APR shows how the price compares with other credit: $15 per $100 for two weeks is about 391% a year.
The short version
- APR = fee ÷ amount borrowed × 365 ÷ days of the loan × 100.
- $15 per $100 for 14 days is about 391% APR.
- Shorter loans have higher APRs for the same fee.
- State law sets the maximum fee where payday loans are legal.
On this page
Fee versus APR
A payday loan’s price is quoted as a fee: “$15 per $100”. An annual percentage rate (APR) expresses the same price over a full year so that different kinds of credit can be compared. Federal law requires lenders to show both.
How to calculate the APR
Divide the fee by the amount borrowed, multiply by 365, divide by the number of days until the loan is due, then multiply by 100.
For a $300 loan with a $45 fee due in 14 days: 45 ÷ 300 = 0.15; 0.15 × 365 = 54.75; 54.75 ÷ 14 = 3.91; × 100 = 391%.
| Fee per $100 | 14-day loan | 30-day loan |
|---|---|---|
| $10 | 261% | 122% |
| $15 | 391% | 183% |
| $17.50 | 456% | 213% |
| $20 | 521% | 243% |
| $30 | 782% | 365% |
The calculator does this for your state’s legal maximum.
Why the APR looks so high
The fee is small in dollars and the loan is very short. A price that would be modest over a year is being charged every two weeks. The APR matters most when a loan is renewed: after five months of renewals a borrower has paid the 391% in real dollars.
Fees beyond the finance charge
- Returned-payment fee if a check bounces or a debit fails; many states cap it.
- Bank overdraft or insufficient-funds fees, charged by your own bank.
- Verification or database fees, allowed in a few states.
- Late fees, where state law permits them.
Lenders may not add charges that are not in the agreement or that exceed your state’s limits.
How the APR compares with other credit
| Type of credit | Typical APR |
|---|---|
| Credit union payday alternative loan | Up to 28% |
| Credit card purchases | Roughly 20% to 30% |
| Credit card cash advance | Often 25% to 30%, plus a fee |
| Installment loan from a licensed lender | 36% to several hundred percent, depending on the state |
| Car title loan | About 300% |
| Payday loan at $15 per $100 for two weeks | 391% |
The APR is the right tool for comparing prices. On a short loan, also look at the finance charge in dollars, because that is the amount that leaves your account.
Typical rates by state
States that allow payday loans set maximum fees from about $10 to $30 per $100, and a few set no cap. See the state law table for each state’s limit, or read how payday loans work.
Common questions
What is the average payday loan interest rate?
Lenders typically charge $10 to $30 per $100 borrowed. On a two-week loan that works out to an APR between about 260% and 780%.
Is the fee the same as interest?
It serves the same purpose. The fee is the finance charge, and the APR expresses it as a yearly rate.
Is there a legal limit on payday loan rates?
Yes, in most states. Some cap the fee per $100, some cap the APR at 36%, and a few states have no cap.
Does Northlight lend money?
No. Northlight is an information site. We explain costs and state rules; we do not make loans or credit decisions.
Check the rules where you live
Whether you can borrow, how much, and what a lender may charge all depend on your state.
Sources
Keep reading
- Payday loan scamsUpfront fees, fake debt collectors and unlicensed lenders: learn the most common payday loan scams and the checks that confirm a lender is real.
- How to borrow money fastA practical order of operations for borrowing money quickly: what to try in the first hour, the first day and the first week, with typical costs.
- If you can't repayMissed a payday loan payment? Here is what lenders can and cannot do: fees, bank debits, collections, lawsuits, and how to stop the damage.
- How payday loans workA step-by-step look at payday loans: applying, the fee, the due date, rollovers and what happens if you cannot repay on time.
- Are payday loans legal?Payday loans are legal in 29 states, capped at 36% to 50% APR in 10 and not allowed in 11 states plus D.C. See which group your state is in.
- Credit card cash advanceA credit card cash advance costs a 3% to 5% fee plus a higher APR with no grace period. See the real cost and how it compares with a payday loan.